29 Mar 2024
Wednesday 15 August 2018 - 11:42
Story Code : 315925

Sanctions recall on 'Afghan effect': One route stopped, new emerges - Professor



Sputnik - Head of investment at National Iranian Oil Company said the contract for Tehrans South Pars gas project with Frances Total and Chinas CNPC remains unchanged. The statement contradicts earlier reports by an Iranian state news agency that quoted Mr. Mostafavi as saying that CNPC had taken over Total's stake in Iran's project.




Sputnik has discussed the issue withSteve Hanke, Professor ofApplied Economics and Co-Director ofthe Institute forApplied Economics, Global Health, and the Study ofBusiness Enterprise atJohns Hopkins University inBaltimore.

Sputnik: Director ofIrans State Oil Company dismissed the rumors ofCNPCs overtake ofTotals share inthe project. What do you make ofthe earlier reports and how likely is CNPC totake overTotals share anyway?

Steve Hanke:I think its fairly likely that they will because youve had the US imposing sanctions and inthis case secondary sanctions that would have affected Total, the French oil company thats been inthe South Pars region forsome time, working that field.
And asa result, we have something what I call the Afghan effect. Going back to1980, asyou recall, the Soviets were inAfghanistan; engaged ina war inAfghanistan and topunish them, the Carter administration in1980 imposed an export ban ongrain originating inthe United States and being sold tothe Soviets. The Afghan effect is simple; the Soviets said fine and they went toArgentina and bought the grain they wanted ata good price inArgentina. Thats the Afghan effect. In other words, if you put sanctions init might stop one route and one avenue, butit opens upan opportunity foranother avenue. And inthis case it means that the Chinese are going tobe inthere instead ofthe French Total.


Sputnik: If China was toreplace Total what would CNPCs lead inthe project mean forBeijing and Tehran?

Steve Hanke:It would be a good deal forboth ofthem. It would be exactly likethe result ofthe Afghan effect.

It was a really good deal forthe Soviets and it was a good deal forArgentina which atthat time bythe way, was run bythe generals, asyoull recall.

All kinds ofironic things happen when you start throwing these missiles around, meaning sanctions and you never know where the missile is going toland exactly.

Sputnik: How profitable is economic cooperation withIran forthe European Union anyway and what is the impact ofIran sanctions onEuropean businesses? Will we see more oftheir exodus inthe nearfuture?

Steve Hanke:The relationship must be profitable.

These are private companies inEurope that want tostay inIran and do business. They are not inbusiness tomake losses. They are inbusiness tomake profit, so it must be profitable bydefinition.

Sputnik: Do you think European countries and companies have enough political leverage toact ontheir own and stand totheir own interests when it comes todealing withIran?

Steve Hanke:It isnt dealing withIran; its dealing withthe United States.
Thats who is imposing the sanctions onthe European companies. Thats why the European companies are fearful. And now the EU has, ineffect, said that secondary sanctions that are being imposed bythe United States are illegal; and they have threatened toimpose new regulations and laws themselves inBrussels that would fine companies that comply withthe US secondary sanctions.



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